China president Xi Jinping recently expressed mixed emotions regarding the position of CATL, the world's largest battery manufacturer, on the global battery market, Nikkei Asia reports.
A state news outlet reports that the Chinese leader shared his concerns with industry and commerce representatives during a private meeting during the annual session of parliament.
Xi was concerned about the risks associated with their high position in the market, but he was also happy with the company's success.
Chairman of CATL Zeng Yuqun presented the company's commanding position, which includes a 37 percent share of the global battery market.
China's CATL Grip Over the Global Battery Market
According to Statista, CATL's revenue in 2020 was around 50 billion Chinese yuan (over $7 billion). This represents a nearly 11 percent increase over the previous year. This is a rapid jump, given that the company debuted its stock exchange in June 2018.
CATL has been rapidly expanding its foothold overseas, constructing factories, and licensing its technology to other plants.
According to Reuters, the company recently agreed to license its technology to a new $3.5 billion plant being built in Michigan by Ford Motor Company.
The company has previously offered cost-cutting services to Chinese automakers, aiming to undercut its smaller domestic rivals, such as CALB and EVE Energy. With this, Chinese officials are concerned about CATL's expansion.
Xi Jinping Cautions CATL About Growth
Xi Jinping noted in his address that emerging industries, such as CATL, must strike a balance between development and security while avoiding going it alone in an invincible manner, only to be caught by others and ultimately fail. Xi added that businesses must plan well, determine the size of the market, and identify potential risks.
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Nikkei reports that CATL's share price dropped by 1.6% on Tuesday, March 7, in line with the decline of the CSI300 Index of China's leading stocks.
China's Control Over Its Businesses
Beijing has tightened its control on China's largest corporations in recent years, regulating their business practices in China and abroad, such as fundraising and data security.
China's gaming industry has experienced a decline in revenue since mid-2022 as a result of strict regulations.
Washington has also restricted Chinese firms' access to advanced artificial intelligence chips and semiconductors, citing national security concerns.
Additionally, US Senator Marco Rubio recently requested that the Biden administration review CATL's agreement with Ford, stating that it would increase the United States' reliance on China for battery technology amid sanctions.
China Responds
In response, China intends to scrutinize the deal to ensure that CATL's core technology will not be shared with the American automaker.
According to Dong Yan, a Chinese industry think tank, the benefits of the collaboration outweighed the risks of technology being leaked.
Dong notes that the partnership between Ford and CATL will be beneficial for both parties and will not jeopardize China's leadership position in the electric vehicle industry.
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